Seed patent growth prompts litigation and licensing fears

Please enter a maximum of 5 recipients. Use ; to separate more than one email address.

Recipient email(s):

Recipient name(s):

Email yourself a copy?

02 November 2018
|

Patrick Wingrove, London

European seed companies prepare for licensing and litigation difficulties as technology allows them to patent more inventions and threatens to stifle the industry’s strong sharing culture

European seed companies are worried about licensing and
litigation problems rising from their growing patent portfolios.

"Seed companies are all preparing for litigation," says
the IP research manager at a Netherlands-based seeds company.
"I suspect the sector will increasingly be forced to turn
their attention to these kinds of matters, especially those
companies that have something to offer."

According to in-house sources, technological advancements
in agriculture are leading seed companies to shift business
models and become more like biotech companies, which is
making it easier for them to register patents.

That development has led to a patent boom in the industry
because companies want the commercial opportunities that come
from better protecting more inventions. But they are also
afraid that more patents will lead to companies blocking
competitor access to plant variety innovations and increased
oppositions will emerge as a result.

That would erode the sharing culture that the industry
relies on to innovate and survive. As the head of industrial
property at a global seeds company points out, plant variety
developments can only be made if companies work together to
improve on one another’s achievements.

"Plant breeding cannot be done from scratch," he says.
"Seed companies must work on material that already exists,
which means that they are always standing on the shoulders of
the previous generation."

The question in-house counsel are asking themselves then
is: "How do we have our carrot cake and eat it too?"

European seed companies traditionally did not own many
patents. The
European Patent Convention and the
EU Biotech Directive (98/44) sets out that plant
varieties and essentially biological processes for plant
production are excluded from patent protection – in
stark contrast to other jurisdictions, such as the US.

The laws do not rule out patent protection on plant
varieties altogether, but they did have the effect of
severely limiting how many inventions seed companies could
register in Europe.

These companies have instead relied on plant
breeders’ rights (PBRs) for a long time to
protect their inventions on the continent. Those rights
grants them exclusive control over the propagating and
harvesting material of a new plant variety so long as it is
new, distinct, uniform and stable, and allow competitors to
request and buy protected varieties to further breed and
develop them.

But over the past five years, agritech has taken a massive
leap forward and new tools have allowed businesses to more
easily discover and replicate specific plant traits that may
encompass several varieties. These traits and the technology
used to find them can be patent protected in Europe.

"The key is that competitors cannot just take commercial
material or patented inventions and mix it with their own
products," explains a European patent attorney for a Dutch
food-tech company.

Nip blocking in the bud

An obvious solution to this problem is for seed companies
to implement good licensing mechanisms. But that is trickier
than it sounds for smaller Europe-based firms, although less
so for larger seeds companies that are used to patenting
seeds in places such as the US.

"That’s a new and challenging development
because we do not have licensing businesses – we
sell seeds," the IP research manager of a Dutch seeds company
sells Managing IP.

He says that as well as selling traits, seed companies are
looking to commercialise the underlying tech, which is
driving them to create new business models – but it
is a slow process. His company, by example, started a
spin-off company focused on leveraging the technology used to
develop vegetables.

"The change has forced seeds companies to enter into
negotiations or discussions with different players in a way
we have never had to before," adds the head of industrial
property at the global seeds company.

The challenge for seed companies then is to ensure that
the industry voluntarily follows a system similar to the one
that governs standard essential patents in the
telecommunications sector, which must be licensed under fair,
reasonable and non-discriminatory terms. But we know that
implementing an FRAND SEP licensing system has not been
exactly been easy for them.

Creating such a system could be much easier for an
industry that is long used to sharing inventions –
but as the recent Monsanto litigation indicates, that culture
is not necessarily shared by every seed company.

One solution that the sector has started to develop is
an international licensing
platform (ILP), which can be used by breeders to buy
trait licences for a fair and reasonable cost so that they
can bring new and improved products to the market.

"ILP members want to continue breeding and believe that
limitation on access to bio material is not a good thing,"
says the research manager. "The only major player that has
not joined up is Monsanto, but it has been acquired by Bayer,
which is a member of the ILP, and so it may join soon."

Growing litigation?

Inevitably, the rise of patent protection has also led to
more oppositions emerging in the industry. European plant
breeders did not need to oppose their
competitors’ rights when they had easy access to
all or at least most of their competitors’
innovations under PBR terms.

The head of industrial property says around 10% of his
company’s filings have been opposed by
competitors at the patent office, but that represents a
considerable increase in oppositions for his company.

The IP research manager at a Dutch seeds company tells
Managing IP that all of his firm’s patents has
been challenged, and the firm is much more actively
consulting external counsel as a result, adding that this
trend is likely to spur a considerable increase of litigation
actions.

He says that the sector will likely see a lot more
opposition activity from companies that are less
technologically driven and have yet to come to terms with how
those solutions are changing the seeds business.

But the head of industrial property argues that most legal
challenges in Europe are likely to be settled because of the
sharing culture of the seeds industry. He adds that many
companies in the seeds sector are small and their legal
strategies are not particularly developed.

"In the end, if one company wants to acquire the rights
from another, they’re more likely to try and get
a good deal through the ILP rather than jumping straight into
an opposition or litigation battle."

He points out that the creation of the PINTO database is
one step seeds companies have already made to reduce the
likelihood of bitter oppositions. The database enables
various companies to voluntarily disclose varieties that are
patent protected, allowing peers to know if a given variety
is under any patent right so that they can chose to get rid
of the patented invention when breeding with it or simply
request a license if the invention is worth it.

"This is another move from the industry to ensure that
efforts in breeding are protected, therefore allowing the
funding of the next generation of products, but in the same
time, providing transparency to the sector."

But the threat of increased litigation varies depending on
how a company works with seeds. For very niche companies,
such as those that have used technology to better identify
proteins in seeds, the risk of challenges and litigation of
reportedly very low.

"We have never had a patent opposed – there does
not seem to be an interest in our specific processing
methods," explains the head of IP at a France-based food
technology company. He adds that the lack of opposition may
be because the seeds industry is very broad and his
company’s particular field is very new.

The head of industrial property also argues that
litigation will likely become more common in the European
seeds industry, but more so against pirates than competitors.
The commercial opportunities in seed traits, he says, will be
identified by counterfeiters more and more, who will
increasingly infringe patents to the detriment of the owner
and the industry.

"More people will begin to multiply bio material and try
to sell it under cover without the right name of the plant
varieties and so on. Patents are often seen mainly as a way
for companies to oppose one another, but that is just the tip
of the iceberg."

Patents portfolios are growing in the seeds industry. The
change is good because it funds further innovation but it
also has the potential to create bitter divisions between
companies that could ultimately stifle innovation. Steps have
been taken to secure transparency and access to patented
traits and technology, but it is early days and time will
tell if these projects are sustainable.